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Nokia more cutting-edge, having learned from the past

By Karamjit Singh March 22, 2016

Able to build on 4G leadership while offering operators reassurance over 5G

NOKIA’S acquisition of Alcatel-Lucent, first announced in April 2015, started life in January this year and puts Nokia on a much stronger footing today, claims a senior executive.

First, there are the 44,000 R&D (research and development) engineers out of a total staff strength of 106,000. Also, the renowned Bell Labs has now been given added prominence under Nokia.

This has Nokia’s president for Asia South, Nicolas Bouverot (pic above), to declare that the new Nokia is now “an innovation powerhouse with an intellectual property portfolio second to none.”

It has an R&D budget of €4.5 billion (US$5 billion) and a portfolio of 31,000 patent families, comprised around 90,000 granted patents and patent applications, he tells Digital News Asia (DNA) in a recent phone conversation.

And that’s good news for Nokia’s customers, a point Bouverot is quick to emphasise, with particular mention of 5G (Fifth Generation mobile technology).

“Nokia has always been strong in mobile networks but now we add the strong IP (Internet Protocol), fixed networks and enterprise expertise and capabilities of Alcatel-Lucent to our portfolio.

“And while the name of the game today is 4G and the enhancement of 4G, with 5G expected to be introduced from 2020, operators already have their eyes on 5G and want the reassurance that their network partner has the capabilities to deliver 5G for them,” he says.

Claiming to be a leader in 4G and sharing a Gartner report that positions Nokia in the ‘Leaders’ quadrant of the Magic Quadrant for LTE Network Infrastructure 2015, Bouverot declares that Nokia “has every intention of being a leader in 5G as well.”

While the technical credentials of the new Nokia are evident, along with its €26.6 billion (US$30 billion) in revenue in 2015, the question mark is on the company successfully integrating its acquisition of French company Alcatel-Lucent for all 106,000 staff of the combined company to be marching to the same beat.

After all, both companies have been through poor mergers themselves, coincidentally both in 2006. The acquisitions of US network vendor Lucent by Alcatel and Germany’s Siemens Networks by Nokia failed to deliver many of the synergies expected, with not just cultural clashes but also management distraction that allowed rivals Ericsson and Huawei to take customers away from them.

Bouverot is aware of the naysayers.

“A number of people expect us to fail as it is a complicated task to combine two large companies. Plus our 2006 mergers translated to loss of market share for both,” he acknowledges.

But both companies have learned from their previous mistakes, with Bouverot saying that “the integration of the two is miles ahead.”

Bouverot came from the Alcatel-Lucent merger, and claims that “the Alcatel-Lucent merger was nowhere as well-defined as the present merger.”

For instance, one of the mistakes of the past was the lack of clear leadership roles, where it was more a compromise with management responsibility shared by both parties – which led to lengthy and protracted decision-making.

“But in the current case, Nokia is in the driving seat as it is the acquiring party – management structures and roles are very clear, with positions appointed quickly with no ambiguity,” he says.

“As a result, when we came together on Jan 14, we were already operating as a single unit. And, I can say with confidence that we are 95% there, including making announcements about portfolio rationalisation at the Mobile World Congress in Barcelona in February,” he adds.

In Malaysia, a market that Bouverot describes as a “top priority with some interesting opportunities,” Nokia has over 400 staff.

With both Nokia and Alcatel-Lucent having their own customers in Malaysia, the merged company now allows Nokia to offer new capabilities to the combined set of customers.

That pool of customers however, especially among the operators, has gotten smaller in Malaysia, due in no small part to Maxis’ decision to go predominantly with a single vendor, Huawei, for all its network needs.

It is believed to be the first time this has happened in Malaysia, and does not bode well for other telco vendors such as Nokia and even the Swedish-based Ericsson.

Asked on the ramifications of the Maxis decision, Bouverot shares his personal observation: “I would not recommend to any customer to go with a single technology partner.

“I think it is important to keep a healthy multivendor environment where you challenge the people of the vendors you work with.

“Plus, it’s hard to have someone who is good across the board, and that actually prevents you from getting the best technologies over a period of time,” he argues.

With all the assets that the new Nokia brings to the table, Bouverot, who is one month into his new role, will no doubt be busy meeting every operator in Malaysia to update them on the capabilities Nokia can offer them – and that includes even Maxis.